Cashing in on manufacturer-supported promotions.
And for the most pan, both retailers and manufacturers feel this backing is quite valuable. "Working with retailers on promotions is important to our business because it can give us display space in a prominent area of the store," said Carl Andrews, public information manager for Hershey Foods Corp. "Our goal is to pro
vide retailers with a vehicle to sell more of our products."
Ensuring that retailers honor the deal that was struck is the main concem for manufacturers. "The hardest part is the execution of the promotion," said Mary Drennen, marketing service manager for Borden. "Sometimes we run into a situation where someone at the supermarket's regional office agreed to do the promotion. We set up the deals, and then the individual store managers don't want to participate. We can't force it down their throats. "
Lee Schear said retailers should be happy for the support. "There is a real advantage for retailers to work with vendors in puffing together a promotion," said the president of Metro Markets in Dayton, Ohio. ."Vendors help pay the costs of the promotion. It is as simple as that. Depending on the deal worked out, vendors can pay for advertising, in-store entertainment, product, public relations surrounding the event and other expenses incured. "
John Fitch, an independent who operates in Wilmore, Ky., agreed. "The way I see it, there are absolutely no disadvantages in obtaining vendor support money," he said. "For independents, this is especially true when it comes to advertising dollars. It's really tough for an independ ent to compete with the Krogers of the world. These big chains have advertising that goes into households eight times a day. The only way I can compete with that is through a strong vendor-support program. I'll take all the help I can get."
There is another reason for seeking vendor support, according to Terry Pennington, owner of Pennington's Supermarket in Ash Grove, Mo. "In-store promotions help retailers build image within the community. But promotions can be expensive. We aren't looking to make a fortune off these promotions, but we don't want to lose money on them either. Vendor support can help us build our image without spending a lot of money."
Boosting store image was the idea behind Pennington Supermarket's vendorsponsored outdoor promotions, which took place in the fall and spring of last year. "The people in our community got really excited," Pennington said. "And any time you can get customers involved with the store it helps build its image. The primary purpose of the event wasn't to make money. It was to build our customer base."
Sales increases of 20 % and 40 % for the week of the outdoor promotion in the fall and spring, respectively, were an added bonus, he said.
Pennington set out to get vendor support for the promotion well in advance. "It is a lot of work to organize a promotion, especially if you are contacting the manufacturer salesmen yourself and not going through your wholesaler," said Pennington.
"I worked on deals with the salesmen about six weeks before I intended to hold the event," he said. "I hit them up early because some salesmen have limits to what they can do. I found that the more time I gave them to work out the details, the better deals they came up with."
Pennington's vendors supported the outdoor sales by supplying ad money, product demonstrations and deals for sale items. "Not every manufacwrer can offer the same support," he said. " Some have money for advertising and some can only supply product and a person for demonstrations."
In return, these manufacwrers were included in the store's advertising. "We beefed up our advertising to about double what it usually is," said Pennington. "We added radio advertising, which we normally don't have, and put our printed inserts into another area newspaper to broaden the consumer base we would reach."
Product demonstrations also were an important part of the event. "We set up a tent in the parking lot and ran the demos in that area," he said. "To tie it to the inside of the store, we put these items on display and ran them at sale prices. The vendors supplied everything needed for the product demos."
Product demonstrations can benefit everyone involved, said Pennington. "The vendor gets to test his new products, the customers get to sample products before they buy them, and we find out whether the products are worth giving shelf space to," he said. "If a product doesn't sell in the weeks after it has been sampled, it may not be worth carry' ing."
Demos were the main thrust behind Ted Jordan's sampling festival, which took place at the Oak Tree ShopRite he owns in Edison, N.J. "There were 75 product samplings going on at one time," said Jordan. "More than 30,000 people came through our doors during the three days of the promotion. And sales were up about 20%."
Jordan worked with an outside agency to organize manufacturers to sponsor the event. "The Lempert Co. came to me with the idea of putting together a massive sample festival," said Jordan. The company is a New Jersey-based advertising, marketing and public relations firm.
"I thought it sounded like an interesting idea, so I paid a promotional fee to the marketing company to have it work out the details," said Jordon. "For the most part, Lempert employees got in touch with the manufacwrers and set up the deals. But I did a good amount of legwork, too. I got about a dozen vendors to participate by contacting the salesmen at store level."
Jordan said participating vendors got a lot for their money. "The only costs to the vendors were the cost of the people to run the demos and the cost of the product," he said"There was no charge for being included in our advertising or for display space in the store. And we did a lot of advertising to promote the event. I even called WABC, and it covered the event on its evening news program."
The sample festival wasn't the only time Oak Tree ShopRite used vendor support to make headlines. In fact, Jordan makes sure his store is in the spotlight at least once a month by inviting entenainers to perform at his store and by hosting radio broadcasts.
"I set aside an area of the store to be used as a stage for performers, which through the years have included appearances by sports celebrities, Elvis impersonators and Chippendale dancers," said Jordan. These events, sponsored mainly by manufacturers, have built Jordan quite a reputation in the community.
"Keeping the store alive with action is very important to my business and my store's image," he said. "I am always looking for vendor support. I have to because the shows cost anywhere from $200 to $2,000 to run."
So far, Jordan said he hasn't had trouble finding sponsors. "In fact, for some of my promotions, such as the live radio broadcast, I have a waiting list of manufacturers who want to be sponsors," he said. "Everyone wants to be part of a successful promotion."
But Jordan said he is selective about whom he works with. "I try to work with vendors who work with me," said Jordan. "A lot of manufacturers come in with their hot deals and ask for display space and exposure. But when I ask them to sponsor a particular event, they don't go for spit. Some only want to be associated with promotions that involve bigname celebrities. It is important to build a good rapport with vendors and know who is there when you need them."
Rick Hagen, merchandiser for Pratts Foods, a 10-store operation based in Shawnee, Okla., agreed that it is important to know your vendors. "It is definitely important to build a good working relationship, " he said. Dealing with manufacturers is a two-way street. As retailers, we want a lot of money from manufacturers to promote their products. But we have to give something in retum. A successful promotion should be beneficial to the retailer, the manufacturer and, ultimately, the customer."
An eye on salesmen
Hagen said retailers have to keep on top of salesmen to stay aware of deals that come up. "I work closely with them-to a point," he said. "But they have to remember that this is still our store. If we decide to cut back facings or work a deal with one of their competitors, that is our business."
Retailers can run into problems if vendor requirements are too stiff, said Hagen. "Some manufacturers demand that you cut prices, include them in advertising or guarantee their products endcap displays," he said. "You have to know what you are getting into."
Pennington said one of the criteria he uses in deciding which vendors to work with is salesmen follow-up. "Being in close contact with salesmen is the best thing to do because they can make you a lot of good deals," he said. "Actually , I depend on the salesmen quite a bit. The ones I am quickest to work with are the ones that don't tie my money up. I can't wait six months for my billback. I like to get my money back in at least three months. The ability to do this makes a difference in whether I'm going to deal with the company again."
"You have to be careful to look at all the details," said "It can be like selling your soul to the devil if it doesn't work out and you have to pass up good deals with one manufacturer to honor an agreement with another. But for the most part, vendor participation in promotions is excellent because the vendors want to sell products, and their follow-through at store level is very important."
Jordan relies on the same eight sponsors for his in-store radio broadcast. "I do this because the sponsors get a lot of mileage for the money," he said. "There are no commercials during the broadcast other than for the sponsor. It is a good deal, and I like to know who I am working with. And I always want the manufacturer to know that I am not going to just take the money and run. I really appreciate their support and try to do everything to give them crcdit for the event."
Each radio broadcast, which takes place one Saturday morning a month, costs $1,000 to sponsor. In retum, the manufacwrer is included in newspaper advertising and in promotional materials for the event, said Jordan.
"We have electronic message repeaters in several areas throughout the store that promote the upcoming event and state that it is being brought to the customers courtesy of the specific sponsor," he said. "And we run special price features of the manufacturer's items for a good two weeks before the event."
Perhaps just as important to the manufacturer is that the radio station begins plugging the event the week before it takes place. "The manufacturer gets about 30 mentions on the radio during that week," said Jordan.
Radio publicity was one of the reasons John Meggs gave for the number of manufacturers he has waiting to sponsor Price Chopper's Family Fun Night. And, as with Ted Jordan, Meggs said he relies on the same sponsors month after month. "These vendors are working out quite well," said Meggs, ad group coordinator at Associated Wholesale Grocers, based in Kansas City, Kan "There really isn't any reason for us to use other manufacwrers, although we do branch out to others on occasion."
Participating manufacturers get a lot of exposure from the event, which takes place once a month. A local radio station does a live remote from one of the 16 Price Chopper stores, said Meggs. "The radio station mentions the promotion every hour the week of the event. Each of the eight participating vendors gets mentioned in these 60-second spots. That's a lot of exposure."
The vendors also receive a lot of attention at store level. "Every store in the Price Chopper group builds displays for the products, complete with decorations and banners," said Meggs. "The stores also feawre the products at special sale prices in the advertising."
Besides paying for the radio broadcast at the store, the vendors supply prizes for drawings, which take place every 15 minutes during the three hours of the promotion. "They donate boats, television sets and trips for two to Disneyland," said Meggs.
The vendors also supply mascots to hand out samples and do product demonstrations at the store holding the radio broadcast. "The event serves an important purpose for us," said Meggs. "We want to promote our store as a family place. That is the image we are trying to create.
"Sponsoring the promotion is a big commitment on the part of the vendors," said Meggs. "When I first approached vendors about sponsoring the event, I put together a list of what the manufacturers would get out of it. It didn't take long for them to accept because they realized that they couldn't touch the amount of exposure they were going to get for the price."
Publicity is probably the most important thing a manufacturer gains by sponsoring promotions for retailers, said Fitch, the independent from Kentucky. "The company name gets out to the public, and consumers associate it with worthwhile, exciting events. Many times manufacturers can cut their ad costs by joining with other manufacturers to defray the expenses . But manufacwrers have to be careful that they offer every retailer equal deals, otherwise they may find themselves in some hot water," he said.
"Some retailers say that larger chains get better deals than smaller stores," said "But I don't think this is so. It is really a matter of getting in touch with manufacturers. A one-store independent may not have the time to put together a promotion if he is busy trying to survive. Larger operations may have a better opportunity because we have more people able to spend time working out deals with manufacturers."
Independents may be able to jump on vendor-support programs easier than chains, he said. "We have 10 highvolume stores," said "Manufacturers may be quicker to work with me because I don't have to answer to a chain of command to find out what we can do at the stores. And they know our stores are able to turn around the products. I don't get better deals than one-store operators or large chains, but I may have an easier time taking advantage of deals that come along."
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|Date:||Jan 1, 1989|
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